In barely half a decade, the sharing economy has made a deep impact on the lodging and ground transportation industries, while revolutionizing users' habits. With its motto "access trumps ownership," the sharing economy refers to individuals renting things they need from other individuals through technology-based networks that facilitate transactions. New forms of rental are springing up in all kinds of areas, from bedrooms and cars to garage space and accommodation for pets. This is not a fad but a robust trend that is transforming society and business models, much like Facebook and Twitter before it.
Among the most well-known, Airbnb (founded in 2008) is now valued at $15 billion to $20 billion depending on the sources, while Uber (founded in 2009) is estimated at $40 billion to $50 billion, making it one of the 150 largest companies in the world.13 Given their more mature business offerings, these two companies are the primary focus of this section.
Whether they like it or not, companies should be mindful that corporate travelers are probably already using these services. According to Fortune Magazine, the number of transactions captured by one large expense management company in its expense reporting tool multiplied by five for Uber taxi services and by 27 for Airbnb rentals over a year.14 All the signs lead to further growth in managed travel, particularly in ground transportation. According to our survey, 43 percent of travel managers consider the sharing economy an important trend in this area, and 31 percent for sharing economy accommodations.
As could be expected, the use of sharing economy services is higher among millennials or "Generation Y" travelers, born between 1980 and the mid-2000s. Twice as many of these travelers have used sharing economy services for business travel, and more have used them for ground transportation than for accommodation.
A number of factors are driving this growth. In particular:
A number of new features are making it easier for companies to integrate sharing economy options into their programs, based around billing, reporting and expense management:
One of the biggest barriers to more widespread adoption by business travelers is the perception that safety and security risks may be higher in the sharing economy than classic travel solutions. This is the primary concern for surveyed travelers who have tried sharing economy travel solutions.
This concern is even more marked among travel managers.
These concerns are legitimate when the market is used to certain assurances from established brands and the media has publicized incidents ranging from road accidents to fraudulent requests for payment and credit card billing errors. A number of legal battles have also drawn negative coverage.
However, these issues should be put into perspective. Each sharing economy brand has its advantages and disadvantages (see Figures 34-35) but providers and legislators are working to reassure people and offset the risks.
As the available offerings develop, whether or not companies are comfortable integrating sharing economy offerings into their programs ultimately depends on their culture. More traditional, risk-averse companies may decide that the risks outweigh the benefits, while others have already embraced the trend.
Global company opens up its travel program to alternative lodgings
A large technology company noticed from its expense data that a small but growing percentage of its travelers were using Airbnb-type alternatives to hotels. Usage was particularly concentrated on San Francisco, London, New York and other high-occupancy markets where room availability can be a challenge. Travelers clearly saw sharing economy accommodation options as appropriate for their needs, so the company wanted to explore whether it should formally offer this option to them.
Safety and security appeared to be the main barrier to including these types of suppliers in the travel program. After carefully weighing the pros and cons, the company decided that many of the perceived risks (e.g. hotel security breaches) were also present with existing suppliers. It worked with Airbnb to capture booking data and feed it to International SOS for tracking purposes to enhance the level of assurance provided.
As a result, the company updated its policy to include Airbnb as an option, communicating the change to employees in the spring of 2014 via a company group travel page. While Airbnb still accounts for a fairly low percentage of the company's total hotel spend (typically less than 1 percent), employees benefit from additional lodging choices when they travel.
Since the sharing economy cannot be ignored, companies need to make sure they are asking the right questions:
CWT can help companies to tackle this issue in a variety of ways. For example, CWT Solutions Group has created data-matching models to provide visibility on how an organization's travelers are using sharing economy suppliers and how much they are spending, before identifying opportunities to integrate selected suppliers into the travel program. CWT can also provide support with tracking booking data (e.g. through the CWT To Go app), improving program performance (e.g. through CWT AnalytIQs) and updating travel policies.
13 Source: TIME Magazine, "Baby you can drive my car and stay in my guest room. And do my errands and rent my stuff. My wild ride through the new on-demand economy" (July 2014)
14 Source: Fortune Magazine, "Uber and Airbnb are complicating corporate expense reports" (July 29, 2014)
15 Source: A CWT survey in Room for savings: optimizing hotel spend (2009) showed that a convenient location ranks above all other features for travelers choosing a hotel. Similarly, convenience is the most important feature of booking tools for travelers.